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MAGNiTT publishes 2023 Emerging Venture Markets Report

● Funding in the Middle East, Africa, Pakistan, and Turkey crossed the $7 billion mark
again in 2022 thanks to a record Q1, but deals registered a 4% drop from 2021
● Fintech investment led the way despite the “Crypto Crash” while Emerging Venture
Markets continued to mimic the global VC landscape
● MAGNiTT predicts correction in valuations will present significant M&A opportunities
in 2023
● Pakistan tripled its exits in 2022, exceeding its total in the last five years

MAGNiTT, the largest verified data platform tracking venture capital investments across
emerging markets, released the 2023 edition of its annual Emerging Venture Markets Report today. The report continues MAGNiTT’s tradition of analysing and comparing VC
investments in technology startups headquartered in the Middle East, Africa, Pakistan, and
Turkey (MEAPT) region.

Topline data from MAGNiTT’s latest report reveals sustained levels of funding – exceeding
$7 billion for the second year in a row – and a steady number of transactions in MEAPT,
driven by a record first quarter in 2022. However, further analysis shows a decline in funding and deals in subsequent quarters – in line with a worldwide pullback in venture investing – reflecting caution by VCs as a result of several macroeconomic developments and a climate of general uncertainty.

Within Emerging Venture Markets (EVMs), the MENA region continues to attract significant
interest, surpassing its 2021 funding levels and crossing the $3 billion mark in 2022. This
increase was largely driven by a 72% jump in funding for Saudi Arabian startups, while
Egypt led the number of deals in MENA at 160 transactions. Africa saw close to $3 billion of
investment as well, driven by Nigerian startups raising 29% of funding and closing 198 deals. Meanwhile, Turkey led EVMs overall in number of deals, with 295 transactions in 2022.

Philip Bahoshy, Chief Executive Officer of MAGNiTT, commented on the report by saying,
“The venture investment landscape across the markets we cover was turbulent in 2022,
echoing the global industry. We saw record highs in Q1 followed by rapid realignment as
macroeconomic challenges took hold. Interestingly, deeper analysis of the data showed
greater complexity in terms of investment divergence and funding success across the
different geographies.

Bahoshy added, “More than ever, and particularly during this uncertain environment, there is greater engagement from governments, regulators, investors, and founders with the
real-time analytics and the unprecedented depth and verification we are able to deliver via
the MAGNiTT data platform. As we prepare to expand into Southeast Asia this year and
launch a new predictive analytics capability, we can only anticipate greater progress for this
promising industry, supported by robust policy- and decision-making that is driven by
insightful data.”

Key Highlights
1. A record-high first quarter drove funding in Emerging Venture Markets, which crossed
the $7 billion mark once again in 2022. However, total EVM funding of $7.24 billion in
2022 is 2.3% lower than the $7.41 billion achieved in 2021. For context, there was a
more than 238% jump in total funding from 2020-2021 ($2.19 billion to $7.41 billion
2. Funding amounts for deals of less than $100 million (or “mega” deals) increased by
11% from $4.14 billion to $4.60 billion. Most of these were made in Q1, likely an
“afterburn” from 2021 as a result of delayed impact from more developed markets.
3. Funding and deals declined in Q2 and Q3 then settled in Q4. This continued the
downward trajectory from Q1 in line with the global venture capital landscape,
marking an uncertain environment as we enter 2023.
4. The evolution of EVM deal sizes in 2021 continued into 2022, with round sizes of
$1M-$5M, $5M-$20M, and $20M+ each gaining in proportion over those in the 0-$1
million range.
5. Exits across EVMs continued their upward trajectory to 144 in 2022, with an increase
of 36% over 2021, reflecting continued maturity in the region’s VC industry. Middle
East exits were the highest among these at 49, an increase of 69% over 2021.
6. Fintech investments continued to lead EVM deals in 2022, followed by E-commerce,
Transport & Logistics, Enterprise Software, and Healthcare in a repeat of 2021

Pakistan Highlights
1. Pakistan-headquartered startups raised $315 million in funding across 72 deals, with
six exits in 2022
2. More than half the funding that Pakistan saw was covered by its top five deals in
3. Although the number of deals in Pakistan fell by 20% in 2022, funding declined by
only 5.4%.
4. Exits reported in Pakistan tripled in 2022, thereby exceeding the exits of the last five
years combined.

Record Exits Create Opportunities for Consolidation
With Emerging Venture Markets often manifesting the broader macro story playing out from prior periods, the broad correction in startup valuations, and along with higher interest rates and subsequent fundraising challenges and cash conservation, opens up opportunities for VCs, corporates, international startups, and regional players to consolidate their market positions by acquiring attractive, promising companies in EVMs at lower valuations, which could drive significant M&A activity in 2023.

“We witnessed a record number of exits in 2022, increasing by 36% to an overall record of
144,” Bahoshy explained. “While usually an indicator of industry maturity, we can’t tell how
many of these are a consequence of the challenging funding landscape or delivering returns
for their investors. What is clear is that a normalisation of valuations to pre-pandemic norms is likely to see this exit trend continue into 2023 as opportunities arise for international startups, regional corporates and well-funded companies from the region.”

Bahoshy also noted that, aside from M&A activity, opportunities will still abound for smaller
startups at earlier stages of funding. “As liquidity becomes harder to come by, especially for
larger investments, it is likely that startups raising SEED rounds or early Series A will be in a sweet spot thanks to their more realistic valuations, specifically those with product-market fit and a clear path to monetisation for investors that still have dry powder,” he said.

MAGNiTT’s Emerging Venture Markets 2023 Report, which highlights the venture capital
trends in the Middle East, Africa, Pakistan, and Turkey is available online to download for
free, with a full 100+ page report available for purchase that dives deeper by industry,
country, investors, exits, and more. The data underpinning the Emerging Venture Markets
2023 report is sourced from the MAGNiTT platform.



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